Mortgage Interest Rates Could Be The Lowest We See In A While
Good Monday Morning!
Our local Real Estate market in the Eugene and Springfield area remains sluggish in most price ranges and areas. This is particularly true in the price range of $900,000 to $1,200,000, where we are seeing extremely slow sales and an inventory that has now increased from 2 months to almost 8 months. The reasons for a sudden shift in the home sales market both here in the Eugene and Springfield area and nationally is the same as what I have mentioned previously. Inflation in home prices that has driven home values to an extreme, higher mortgage interest rates, and also a tough recession economy have all combined together to create our current depressed Real Estate market. This week, the Fed meets to determine if there will be a rate reduction and, if there is, how much of a reduction there will be. A rate reduction of 1/2 of a point had been expected, but now this much of a reduction is in doubt due to poor job numbers and inflation numbers. Any reduction in rates will be welcome, but don't look for any significant reduction in mortgage interest rates. Most, if not all, of any mortgage rate reductions has most likely been built into the current moderate rate reductions we have already seen as a result of rate reduction anticipation by the Fed. If you are holding off on looking for a home to see what mortgage rates do, this could be a mistake. The lower rates we see today may be the best we see for some time, and further rate increases could be in our future. The following is a recent article talking about mortgage rates that was posted on the NAR blog.
Borrowing costs fell ahead of the Federal Reserve’s anticipated rate cut next week. But economists say home buyers may not want to wait to see if rates go lower.
The 30-year fixed-rate mortgage fell to 6.2% this week, down significantly compared to a year ago when they surged above 7%. But some prospective home buyers are holding out for even lower rates in anticipation of the Federal Reserve’s meeting next week, where it’s expected to cut short-term interest rates.
Still, home buyers may be getting their hopes up too much: “Even with the September expected rate cut [by the Fed], mortgage interest rates are not likely to move as this cut has been baked into the mortgage market,” says Jessica Lautz, deputy chief economist of the National Association of REALTORS®.
Instead, prospective buyers may want to take advantage of current rates, which have fallen more than half a percent over the last six weeks and are at their lowest level since February 2023, Freddie Mac reports. The savings on a $400,000 mortgage today compared to October 2023, when rates were much higher, is about $341 monthly and $4,092 annually, Lautz says. “This is substantial,” she adds.
Nevertheless, the homebuying market remains mostly constrained. The Mortgage Bankers Association’s weekly mortgage application index showed that home purchase applications were up only 2% compared to the previous week and down 3% from a year ago.
“The overall housing market remains constrained due to the total cost of homeownership,” Lautz says. Home prices have risen to record highs in recent months.
“Despite the improving mortgage rate environment, prospective buyers remain on the sidelines as they negotiate a combination of high house prices and persistent supply shortages,” says Sam Khater, Freddie Mac’s chief economist.
Have An Awesome Week!
Stay Healthy! Stay Safe! Remain Positive! Trust in God!
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